Carnaby Resources : Half Yearly Accounts

For personal use only

ABN 62 610 855 064

Interim Financial Report

For the half year ended 31 December 2021

For personal use only

Contents

Corporate directory

Directors' report

Consolidated interim statement of financial position

Consolidated interim statement of profit or loss and other comprehensive income Consolidated interim statement of changes in equity

Consolidated interim statement of cash flows

Notes to the condensed consolidated interim financial statements Directors' declaration

Independent auditor's review report

Auditor's independence declaration

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Corporate directory

For personal use only

Directors
Peter Bowler	Independent Non-Executive Director, Chairman
Greg Barrett	Non-Executive Director
Paul Payne	Independent Non-Executive Director
Rob Watkins	Managing Director
Company Secretary
Greg Barrett

Corporate Details

Carnaby Resources Limited (ABN 62 610 855 064)

Issued capital 143,535,253 Fully Paid Ordinary shares

Registered Office

78 Churchill Avenue

Subiaco, WA 6008 Telephone: [phone]

Internet: www.carnabyresources.com.au

Share Registry

Computershare Investor Services Pty Ltd Level 11

172 St Georges Terrace Perth, WA 6000

Within Australia: 1300 850 505

Outside Australia: [phone]

Internet: www.computershare.com.au

Stock Exchange Listing

ASX Ltd

ASX code: CNB

Auditor

Grant Thornton Audit Pty Ltd

Level 43

152 - 158 St Georges Terrace

Perth, WA 6000

Telephone: [phone]

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Directors' Report

For personal use only

For the six months ended 31 December 2021

The directors present their report together with the consolidated interim financial statements of the Carnaby Resources Limited (the "Company" or "Carnaby") Group, being the Company and its subsidiaries, for the six months ended 31 December 2021 (the "period") and the auditor's review report thereon.

Directors

The directors of the Company at any time during or since the end of the period are as set out below. Directors were in office for the entire period unless otherwise stated.

Mr Peter Bowler	Independent Non-Executive Director, Chairman
Mr Robert Watkins	Managing Director
Mr Greg Barrett	Non-Executive Director
Mr Paul Payne	Independent Non-Executive Director

Financial performance

The Company's net loss after tax attributable to the shareholders for the half year to 31 December 2021 was $1,504,761

(31 December 2020 profit: $2,145,123). The Company's net assets decreased by $861,397 (31 December 2020 increased:

$7,327,825). The Company's cash position as at 31 December 2021 was $5,440,970 (31 December 2020: $7,928,088).

Corporate

The Company began receiving proceeds from the sale of the Lainejaur Project in Sweden for total consideration of $1.5 million (See ASX release 19 July 2021). The first payment of $750,000 was received in late December 2021.

During the period, the Company received a total of $560,000 due to the exercise of Unlisted Share Options by Directors, see ASX release dated 31 December 2021 for details.

No further proceeds from a 5% royalty on the Tick Hill Tailing Retreatment Project (see ASX release 3 August 2020) were received during the period while site operational improvements continued throughout 2H 2021. Cumulative royalties received to date are $381,000 with production due to recommence in 1H 2022.

Subsequent to the end of the period, the Company completed a $20 million placement of approximately 15.4 million new fully paid ordinary shares to institutional and sophisticated investors (see ASX release dated 31 January 2022). The additional funds will allow the Company to accelerate exploration activities at its Nil Desperandum and Lady Fanny discoveries at the Greater Duchess Copper Gold Project in Queensland, where more than 20,000m of drilling and extensive geophysical surveys are underway.

Review of operations

During the period, significant RC and diamond drilling programs made multiple high-grade copper discoveries at the Company's Greater Duchess Copper Gold Project in Queensland. Intersections of 41m at 4.1 % Copper at the Nil Desperandum Prospect and 27m at 2.8% Copper at the Lady Fanny Prospect were standout results within rapidly growing mineralisation at both locations. Exploration at the Project is accelerating significantly in 2022 as the Company shifts it primary focus to its operations in Queensland, where numerous additional prospects remain untested over the Company's greater than 1,022km2 of continuous regional tenure.

RC drilling at the Strelley Gold Project in the Pilbara region of Western Australia was conducted, intersecting significant intrusion hosted gold mineralisation at several prospects. Such results defined a greater than 4km long Strelley Gold Corridor which will be the subject of continued exploration during the 2022 field season. Results from several RC holes completed in December 2021 are yet to be received. In addition to the developments at Strelley, soil sampling results from the Company's neighbouring Big Hill Project have outlined a significant lithium soil anomaly which will also be the subject of the drilling programs in 2022.

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Directors' Report

For personal use only

Mount Isa Inlier Copper and Gold Projects, QLD

Greater Duchess Copper Gold Project

The Greater Duchess Copper Gold Project lies approximately 70 km southeast of Mount Isa, Queensland on a land holding of approximately 1,022 km2 with multiple undeveloped copper rich Iron Oxide Copper Gold (IOCG) targets over a 100 km corridor.

Throughout the period the Group has conducted multiple RC and diamond drilling programs on highly concentrated areas of the tenement package, where at the Nil Desperandum Prospect, it has defined a greater than 500m plunging high-grade mineralisation shoot completely open at depth and to the southwest. With a standout result of (see ASX release 29 December 2021):

NLDD044	41.1m @ 4.1% copper from 247m
Including	24m @ 6.5% copper from 251m
Including	9m @ 10.3% copper from 264m,

and outstanding follow-up visual results announced subsequent to the end of the period (see ASX release dated 4 February 2022), Nil Desperandum constitutes a major copper gold discovery for the Group. Additional IP survey results were also announced after the period's end which have extended the chargeability anomaly to the southwest of NLDD044 to over 400m in length (see ASX release dated 11 February 2022), producing numerous follow-up targets.

In January 2022, the Group also announced another copper-gold discovery at its Lady Fanny prospect, located 3km north of Nil Desperandum, with stunning standout results including (see ASX releases dated 13 & 17 January 2022):

LFRC009	27m	@ 2.8% copper from 61m
Including	9m	@ 4% copper from 65m
LFRC013	20m	@ 2.3% copper from 30m
Including	6m	@ 5.5% copper from 38m
LFRC008	40m	@ 1.0% copper from surface.

Additional IP surveys conducted at Lady Fanny subsequent to the period have defined significant chargeability anomalies, which now suggests that the mineralised corridor at the prospect is greater than 600m in length (see ASX releases dated 17 & 25 February 2022).

Significant follow-up exploration consisting of more than 20,000m of drilling and extensive geophysical surveys is being conducted at both Prospects, with the Greater Duchess Copper Gold Project now becoming the primary focus of the Group's exploration activities.

Tick Hill Gold Project

The Tick Hill open pit cutback is forecast to produce 63,300t @ 6.1 g/t for 12,500oz generating pre-tax cashflows of ~$15,000,000 at AISC of A$1,190/oz (see ASX release 5 June 2020). A decision to develop, consolidate and / or divest part or all of the open pit cutback project is in progress.

The third party operated Tick Hill Tailings Retreatment Project ceased processing during the period while site operational improvements were being implemented and relevant governmental approvals were awaited. As such, the Company did not receive any additional funds from its 5% Royalty on production during the half.

Governmental approvals have subsequently been received and production is expected to re-commence in H1 2022.

Pilbara Projects, WA

Strelley Gold Project

RC drilling was completed at Strelley for the first time during the period, where significant gold mineralisation was intersected along the newly identified 4km Strelley Gold Corridor, targeting the Alcazar, Stockade and Bastion Prospects.

At the Alcazar Prospect, a stand-out composite intercept early in the period of 5m @ 4.83g/t from 110m in PLRC0051 (see ASX release dated 27 October 2021) was followed up by further encouraging results later in the year with a composite result of 5m @ 1.82g/t from 160m in PLRC0114 (see ASX release dated 19 January 2022). A single RC hole was drilled 160m to the south of the PLRC0051, which intersected a highly encouraging broad zone of gold mineralisation with composite results of 20m @ 0.45g/t gold from 105m including 5m @ 1.52g/t from 110m in PLRC0112. The intersections are hosted by a wide intrusion and remain open to the south and to the north where results from a further RC hole drilled are awaited.

At the Bastion Prospect, initial RC drilling intersected 2m @ 5.21 g/t gold from 85m including 1m @ 9.75 g/t gold from 85m (see ASX release dated 15 October 2021). In the follow-up drilling program, the target intrusion and encouraging

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